Prospects of higher profitability and ease of availability of land has led cash-rich Oberoi Realty, to scout for land parcels in the National Capital Region, Bangalore and Hyderabad. So far a Mumbai centric real estate company, it is looking at testing waters in other key cities with an investment of between R100 crore and R200 crore.
The company, which has cash reserves of around R1,000 crore, says it will continue to remain a Mumbai-centric player, but is looking at making small investments in cities that provide growth opportunities.
?We are in talks with landowners as well as local developers in NCR. The projects will be either on our own or through the joint venture route,? said Vikas Oberoi, chairman and managing director, Oberoi Realty. He refused to divulge more details, however, said if the opportunity comes, the company may announce a transaction within the current fiscal. Oberoi is looking to focus on residential development in its new planned foray.
Oberoi, which has been on a look out for land for a while now as most of its under construction projects are nearing completion and launch pipeline limited, was of the view that there should be more land opened up in the city.
Oberoi had told FE in november 2012 that the government should open up more land parcels around Mumbai and provide with good infrastructure connectivity from there to city centres so that more houses can come up. ?Gurgaon is a classic example of how Delhi has grown. In fact, Gurgaon has outgrown Delhi in terms of number of people who stay there. So, why should it not happen to the suburbs that are linked to Mumbai,? Oberoi had said.
?Development is happening all around Delhi and we would like to deploy some part of our capital there as a strategic move and explore the market,? said Saumil Daru, chief financial officer, Oberoi Realty.
Daru said there is enough development opportunity in Mumbai as well, as some mill lands from National Textile Corporation may come up for sale, at the same time redevelopment of Asia?s largest slum Dharavi, and Mumbai Port Trust land are also development opportunities that may interest the company.
A largely land-locked Mumbai Metropolitan Region (MMR) has not had any major land auctions from the government side. The last land auction by Mumbai Metropolitan Region Development Authority (MMRDA) was undertaken in March 2008, at a time when the overheated property market of Mumbai had begun to soften. Since then, as a general decision, the authority has held back all land auctions for the time being, a senior official told FE.
Oberoi Realty posted an increase of about 9% in the consolidated net profit for the full year ended March to about R505 crore against R463 crore last year. The consolidated revenues surged by 18% to around R1,148 crore against nearly R975 crore last year.
Oberoi Realty has a promoter shareholding of 78.49% as on March 31, 2012, a tad 3.49% above the permitted limit by Sebi for listed companies, which it can bring down by October 2013. In no hurry to raise cash, the company is yet to decide on the mechanism to bring down its stake. Oberoi Realty got listed on stock exchanges in October 2010.